The free market chose gold as the medium of exchange simply because of the following: it optimizes the characteristics determined in the market to be necessary for a trustworthy medium of exchange. The ability to strongly prevent dishonest and untrustworthy acts by the interventionists is certainly one of those characteristics and is a good reason to return to the gold standard.
Free banking, where banks compete
against each other for the trust of their customers, is almost completely
sufficient to safeguard against fraudulent banking practices. Combined with
refined and enforced property rights it is wholly sufficient. Having a strong
and honest banking system has the advantage of encouraging savings.
Free banking is a very important component of a divine economy since it has the merits of self-regulation, and since it serves the people by providing a storehouse for capital. This is in contrast to the current banking practices which mask the insolvencies of banks and promulgate a system of capital consumption and wealth redistribution.
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